Commercial Real Estate

Commercial Real Estate and Leases

As opposed to residential real estate, commercial real estate refers to property that is used solely for business purposes and corporate needs. Another common attribute of commercial real estates is that theses properties are often rented by business owners. While some businesses do own theses buildings, it is often difficult to acquire the funds for an immediate purchase of a building. There are also many obligations that a building operator must fulfill which can be difficult for a small business owner to take on while still attending to the management of the business. A commercial lease agreement also provides businesses with added flexibility should a business wish to relocate to another market or expand their operations at a different facility.

Commercial Real Estate Classifications

Investors, lenders and brokers often discuss commercial real estate through severally discrete classifications for conversational ease. These categories include: Class A, Class B and Class C. The Class A real estate represents properties of the highest caliber and condition. This type of real estate is often recently constructed with the most up-to-date features, making Class A real estate a low-risk purchase. Class B real estate is just below Class A real estate in quality. These buildings are generally older and have less-experienced tenants but can still make for a great investment opportunity. Class C real estate includes the oldest properties and are often in the least desirable locations. These properties fortunately have some of the lowest rental rates and the greatest renovation potential.

Although there is no specific formula for categorizing properties into of these three classes, understanding the general traits of each class can still be helpful when selecting a facility for rental. Class A real estate usually is best for businesses seeking asset preservation, whereas Class B and C properties can be valuable investment tools for businesses seeking asset appreciation. It is also important to note that a wise selection of real estate property often involves a careful understanding of the relationship between the business model and the property. Our Charleston real estate attorneys provide legal counsel to guide business owners in finding the most suitable property for each and every business.

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